Uncertainty. Chester Steel Fabrication (CSF) is considering submitting a bid to construct a metal bridge for a new highway. The company controller thinks that a bid of $2,500,000 will cover both the costs associated with the project, and the opportunity costs of the equipment and labour that would be used on the project. The company president figures a bid of $2,500,000 is sure to get the job and she intends to bid that amount. However, she is wondering about some of the cost estimates used in the controller's report. 'After some study, the president determined that the costs associated with the proposal could range from $1,800,000 to $3,000,000. A table outlining the range of costs and probabilities is presented below:

REQUIRED 1. Create the decision table.
2. Assuming the objective is to maximize profits, what is the optimal decision? Show all calculations.LO1

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Expected Cost Probability $1,800,000 0.10 2,250,000 0.30 2,500,000 0.40 3,000,000 0.20